The purpose of deUncategorize is to deselect the default category set under Options — Writing (Uncategorized per default) if any other category is selected while writing or editing a post on your WordPress blog.

The 1.3 release allows a custom default category to be deselected — obviously a bug.
Thanks go to Ian Murray for pointing it out and suggesting a fix!

deUncategorize 1.3 (January 16th, 2007): changes since version 1.2

Fixed a bug which prevented the deselecting of a default category that wasn’t the last category listed.